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Economic Inequality and the Hypocrisy of Power

That a French socialist economist is trashing the American economy for fomenting inequality should hardly be news. But Thomas Piketty is enjoying some moments in the popular press, before returning to the usual comfortable sinecure for the left—academia. Why? Well, we are told, economic inequality is on the march again, and must be stopped. Stopped how? By massive governmental programs aimed at taking from one person to give to, well, the government actually. But the government will then give some of it to people in the form of various subsidies and transfer payments, so it will all be good, right?

The usual domesticated “conservatives” (e.g. The New York Times’ David Brooks) are making the usual noises about how this is all the usual hypocrisy from wealthy and prestigious liberals envious of the even wealthier hedge fund managers on their political right. The left, meanwhile, diverts attention from its own well-established and long running bad faith through a series of snide comments about oligarchy and the chutzpah of rich people actually objecting to being trashed in the media.

It’s all rather appalling, really. Our nation continues its descent into cultural anarchy to the delight of the left and the indifference of establishment Republicans. Real people are struggling to support their families, squeezed by a largely fictitious recovery, in which many can’t find decent jobs and most find their standard of living sinking under increased education and healthcare costs, along with the uncalculated burden created by governments, utilities, and insurers dumping clerical duties (and burdens of proof) onto their “customers.” And snarky journalists and academics trade barbs about who is the bigger hypocrite, who has the higher status, and, presumably, the importance of the distinction between a BMW and a Maserati.

The true, dirty secret about our economy is how much it has empowered preening, self-satisfied “geniuses” at the expense of real workers and real entrepreneurs who create value for themselves, their workers, and our society. Our ruling class in the United States has become one of the more venal in the Western world, convinced that it “earned” its place by scoring higher than most people on their SATs and “making it” up the ladder by putting in lots of hours massaging spreadsheets and egos.

Both sides have prospered in large measure through governmental interference. Recent fights over the Export-Import Bank—the source of more corporate socialism than almost any other institution on the planet—belies the claims of corporate welfare mothers and fathers to have “earned” their money. The smug “entrepreneurs” on our left coast have been gouging employees and the public through outsourcing and manipulation of investment capital for decades. And the press/academy “critics?” The battle to get that “top” appointment at the right institution, the “right” mentions in the press and the “right” new toy, have motivated those small minds since the New Deal gave them the delusion that they should run the country.

The fact is, inequality is inevitable. There will be inequality of income so long as there is income. All societies “choose” for some skills and set up some rules benefitting some people and penalizing others. And, surprise, surprise, bad people get rich and good people get or stay poor. Just because a jerk gets rich is no reason to pretend he isn’t a jerk. But it’s also no reason to destroy economic freedom along with the material well-being it makes possible for all of us. Freedom will be used for good or ill, according to the characters of the persons involved, but government cannot, never has, and never will be able to make us virtuous. Welcome to the fallen, sinful world in which mankind has lived since its inception.

There are, of course, differences between today’s societies, which generally support or at least tolerate market activities, and previous regimes. Most importantly, where our society rewards certain sins perpetrated by individual persons and groups, most previous economies rested on the power of rulers to hand out favors. Socialism, of course, reverts to this older calculus, though it allows power brokers to hide behind claims to represent “the people.”

The issue is not how we shall make everyone equal. We can’t do that, though we can hand tyrannical power over to those who promise to do it for us. The question is how we can establish and maintain a decent social structure that ties, however loosely, the garnering of great wealth to the promotion of the general welfare while limiting evil conduct in the pursuit and use of that wealth.

From the royal monopolies of the Elizabethan Age to the corrupt subsidies handed over to rail barons in the nineteenth century to the Obama Administration’s gravy train for “green” corporations, governments have used other people’s money to create unjust and unwise concentrations of wealth. But, while the government can create monetary monsters, it rarely succeeds in slaying them. Harsh policies (like those in France) simply chase away the rich—or at least their money and the jobs it once supported. More stealthy tax policies merely enrich tax accountants and lawyers while making the middle classes and entrepreneurs lose hope.

Economic equality matters in only one very limited sense. As Aristotle recognized more than 2,000 years ago, a successful polity must have a strong middle class. People who have a substantial stake in the economy while still having to work within it are necessary for that economy’s stability. Such folk also are necessary for political and social stability because they thrive, not on “creative destruction” (which is, after all, destructive) but rather on hard work aimed at steady, intergenerational improvements. And what kills a middle class? Big government. Not just socialism (though Mr. Piketty’s policies, aimed at “equalizing” wealth, certainly would do the trick) but big government. Whether it is the Obama Administration’s social democracy or the simple incompetence and lack of discipline of the George W. Bush Administration, profligate government programs stifle competition, undermine the work ethic, and reward hucksterism. The results may, in fact, be rather profitable for those in business willing and able to manipulate the rules to their own advantage. Wall Street has always known how to deal with regulations—they are just more shells in the game. But Main Street, where most Americans live and work, needs fewer, clearer, cleaner rules that allow us to get on with the business of making a living so that we may do the more important work of raising our families.

Bruce Frohnen is Professor of Law at the Ohio Northern University College of Law. He is also a senior fellow at the Russell Kirk Center and author of many books including The New Communitarians and the Crisis of Modern Liberalism, and the editor of Rethinking Rights (with Ken Grasso), and The American Republic: Primary Source. His most recent book (with the late George Carey) is Constitutional Morality and the Rise of Quasi-Law (Harvard, 2016).

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